ASX 200 Live Today - Tuesday, 20th May

Welcome to our live ASX coverage for Tuesday, May 20. We’re excited to be trialing this new format. Be sure to refresh manually for the latest updates — and let us know how we can make it even better.

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ASX 200 ticks higher, Aussie dollar falls

[2:45 pm] The widely expected rate cut is driving some minor movements across equities, currencies and bonds. Here's how key benchmarks are trading (2:30 pm vs. 2:45 pm):

• S&P/ASX 200: +0.27% vs. +0.37%

• Aus 10-year bond yield: 4.49% vs. 4.45%

• Australian dollar: 64.4 cents vs. 64.2 cents

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RBA flags "Severe downside scenario"

[2:35 pm] One of the more interesting lines from the RBA's media release:

"The Board considered a severe downside scenario and noted that monetary policy is well placed to respond decisively to international developments if they were to have material implications for activity and inflation in Australia."

Source: RBA

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RBA cuts by 25 bps to 3.85%

[2:30 pm] The RBA has cut rates by 25 bps to 3.85%, in-line with market expectations. Here are some of the key takeaways from the policy decision:

• Easing Inflation Trends: Annual trimmed mean inflation dropped to 2.9% in March 2025, the lowest since 2021, with headline inflation at 2.4% within the 2–3% target band, driven by higher interest rates balancing demand and supply, though headline inflation is projected to rise near the top of the band as temporary factors fade.

• Heightened Global and Domestic Uncertainty: Increased global economic uncertainty, driven by tariff announcements and geopolitical tensions, has led to financial market volatility and a weaker outlook for Australian growth, employment, and inflation, while domestic demand shows recovery but faces challenges from slow consumption growth and weak productivity.

• Tight Labour Market Dynamics: Despite softening wages growth, the labour market remains tight with strong employment, low underutilisation, and persistent labour availability constraints, contributing to high unit labour costs amid subdued productivity growth.

• Monetary Policy Adjustment: The Board eased monetary policy as inflation risks balanced and remained within target, aiming to make policy less restrictive while staying cautious due to uncertainties in demand, supply, and global developments, with a commitment to monitor data closely to maintain price stability and full employment.

Source: RBA

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Stocks moving on unusual volume

[1:30 pm] These are the S&P/ASX 200 stocks experiencing unusual volume, as a % of their 20-day average volumes.

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Top gainers and losers at noon

[12:30 pm] Here are the S&P/ASX 200 stocks making the biggest gains and declines at noon.

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Bauxite supply disruptions

[12:10 am] Morgan Stanley says recent bauxite supply disruptions could move the needle for South32 and Rio Tinto earnings.

• What happened: The government of Guinea cancelled 40 company mining licenses, impacting approximately 40Mt of bauxite production.

• What's the significance: Guinea shipped approximately 110Mt of bauxite in 2024 or a quarter of global supply. The country is the largest exporter to China and these suspensions could create headwinds for Chinese alumina production.

• Impact for South32: The analysts forecast South32 to produce 5.1Mt in FY26, of which 2.9Mt is exposed to changes in the alumina spot price. A 10% change in alumina prices will drive a ~US$100 million change in EBITDA, or 3.6% of group FY26e EBITDA.

• Impact for Rio Tinto: Rio Tinto produces approximately 60Mt of bauxite annually, with around 10% sourced from its 45% stake in Guinea’s Sangaredi mine, and no comments have been made regarding risks of license revocation for this operation. The bauxite business is projected to contribute ~US$1.4 billion to Rio Tinto’s EBITDA in CY25, representing ~6% of the group’s total, with a 10% shift in bauxite prices impacting EBITDA by ~US$0.3 billion.

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ASX 200 hits three-month high

[11:30 am] The S&P/ASX 200 is currently up 0.65%, trading at the highest level since February 20.

Tech stocks are leading the upside move, with Technology One shares soaring 11.0% after a strong first-half as well as solid gains from names like Iress (+2.4%), Life360 (+2.2%) and Wisetech (+0.8%).

The Financials sector is also posting some strong gains, with the Big Four banks trading 1-2% higher. Commonwealth Bank has returned to the $170 level, lifting its trailing twelve month PE ratio to almost 30x.

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Small caps making moves

[11:00 am] Here are the top small caps ($200m to $1bn market cap) winners and losers as at 11:00 am.

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Top gainers and losers at open

[10:30 am] Here are the top S&P/ASX 200 gainers and losers as at 10:30 am.

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Kogan flags steep Jan-Apr EBITDA decline

[10:15 am] Kogan says technical challenges following a website platform for its Might Ape business has affected sales performance and inventory levels. Here are the key numbers for Jan-Apr (vs. the prior period):

• Strong Sales Growth: Group gross sales surged 20.2%, fueled by a robust 24.2% increase at Kogan.com, reflecting heightened demand and effective market strategies.

• Customer Base Expansion: Group active customers rose 27.3% to 3.4 million by April 30, 2025, with Kogan.com’s customer base up 38.0% to 2.7 million, though Mighty Ape saw a slight 1.8% dip to 695,000.

• Mixed revenue growth: Group revenue dipped marginally by 0.7%, as Kogan.com’s 8.4% growth was offset by a decline at Mighty Ape.

• Profitability Gains: Gross Profit climbed 7.3% to $54.2 million, with a 3.0 percentage point increase in Gross Margin to 39.7%, driven by high-margin Platform-based Sales across the Group

• Earnings Challenges: Adjusted EBITDA fell 37.5% to $6.8 million (5.0% margin) and Adjusted EBIT dropped 63.7% to $2.5 million (1.9% margin), impacted by Mighty Ape’s performance and increased marketing investments to fuel customer growth

Source: ASX Announcement | Company page: Kogan (KGN)

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Broker ratings and target price changes

[9:40 am] A few Macquarie and Goldman Sachs changes of interest:

• Lendlease retained Outperform; target up to $7.79 from $7.24 (MQG)

• New Hope retained Sell but target price up to $3.0 from $2.9 (GS)

• New Hope retained Neutral; target price cut by 6% to $4.00 (MQG)

• Ramsay Healthcare retained Neutral; target price up to $39 from $38.7 (GS)

• Transurban retained Neutral; target up to $13.70 from $12.82 (MQG)

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Earlypay downgrades FY25 earnings guidance

[9:30 am] Earlypay has cut its FY25 earnings per share guidance by 18% from 2.2 cents to 1.8 cents, citing lower than expected use of its invoicing and financing tools.

• Invoice Finance Challenges: Lower-than-expected Funds in Use (FIU) in H2 due to reduced client usage, higher attrition, and weaker new client FIU, leading to a revised FY25 outlook

• Mixed Performance Across Products: Equipment Finance FIU grows steadily with strong margins, while Trade Finance FIU declines as planned with reduced H2 income; portfolio credit performance remains robust across all products.

• Financial and Strategic Outlook: Full repayment of a $5m corporate loan in April eliminated corporate debt, with $8m (~3.0 cps) surplus capital expected by FY25 end, under review for shareholder value optimisation.

• Potential Corporate Activity: Ongoing discussions for a possible change in control transaction, with no guarantee of completion, prompting a pause in the share buyback program, with updates to follow per disclosure obligations.

Despite the downgrade, Earlypay’s stock closed at 22.5 cents on Monday, the new guidance implies a 12.5x multiple (excluding 3 cps cash), presenting an intriguing valuation and balance sheet.

Source: ASX Announcement | Company page: Earlypay (EPY)

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Monash IVF downgrades full-year guidance

[9:20 am] Monash IVF Group guides to FY25 underlying NPAT of $27.5 million vs. prior guidance of $30-31 million or a downgrade of 9.8% at the midpoint.

• Revised Guidance Due to Market Conditions: The company adjusted its guidance due to softer market and operating conditions in March 2025, which deteriorated further in April 2025 across all geographic markets.

• Partial Recovery in May: Operating conditions improved in May 2025, with month-to-date performance stronger than March and April, but not enough to fully offset the earlier downturn.

• Monitoring Brisbane Incident Impact: The company is closely tracking key indicators following the Brisbane incident announced on April 11, 2025, including Queensland and Australian new IVF patient registrations, returning IVF patients for stimulated cycles and frozen embryo transfers, and the transfer of medical records and human material to alternative IVF providers.

• Stable Indicators: Current performance indicators align with levels observed in the months prior to the Brisbane incident announcement, showing no significant disruption yet.

Source: ASX Announcement | Company page: Monash IVF (MVF)

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Technology One tops 1H25 expectations

[9:15 am] Technology One has reported a largely better-than-expected first-half result and upgraded its full-year profit growth guidance. Here are the key numbers vs. Goldman Sachs estimates (May-25):

• Total annual recurring revenue up 21% to $511.1m vs. $504m ests (1.4% beat)

• Revenue up 19% to $291.3m vs. $278m ests (4.8% beat)

• Profit before tax up 33% to $81.9m vs. $76m ests (7.8% beat)

• Profit after tax up 31% to $63m vs. $59m ests (6.8% beat)

• Interim dividend up 30% to 6.6 cents per share vs. 8 cents ests (17.5% miss)

“The Company is well positioned to deliver strong growth over the full year. We indicated that we would continue to step up our profit growth and for FY25, we have stepped up our Net Profit Before Tax growth guidance to growth of 13% to 17% from FY24," said CEO Ed Chung.

Interestingly, Goldman and consensus already forecast profit before tax growth of 18% and 19% respectively for FY25. This means the midpoint of the upgraded guidance range (15%) is below their expectations. The softness may reflect changes to the composition of ARR and higher R&D (e.g. 1H25 R&D was 24% of revenue vs. 20-25% guidance range).

This does mix things up a little, from what would've been a clean sweep of better-than-expected numbers.

Source: ASX Announcement | Company page: Technology One (TNE)

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A strong US earnings season

[9:00 am] Q1 S&P 500 earnings have so-far exceeded expectations, driving the recent equity market rebound. Here are some of the key highlights:

• Robust Q1 Earnings Growth: S&P 500 earnings rose 13.6% year-over-year, far exceeding the 7.1% expected at quarter's end, with the Magnificent 7 (excluding Nvidia) driving significant growth at 28%.

• AI Optimism: Hyperscalers reaffirmed substantial capital expenditure plans, and more companies highlighted improved productivity and monetisation from AI, signaling strong positive momentum.

• Heightened Uncertainty: A record 381 S&P 500 companies mentioned "uncertainty" (highest since Q1 2020), 121 cited "recession" (most since Q4 2022), and 411 referenced "tariffs" (a new 10-year high, surpassing 260 in Q4 2024).

• Tariff Mitigation Confidence: Companies discussing tariffs emphasised supply chain flexibility, cost control, and pricing power, with positive market reception and no significant mention of job cuts as a buffer.

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Positioning tailwind is starting to fade

[8:55 am] Trump's Liberation Day selloff drove several positioning and sentiment metrics to extreme bearish levels. But as the S&P 500 rallies back up to breakeven year-to-date, this tailwind is starting to fade.

• Deutsche Bank: Equity positioning surged last week, shifting to a modest underweight, with discretionary investors leading the charge and now overweight for the first time since late March, aligning with sustained earnings and GDP growth momentum.

• JPMorgan: Positioning climbed from -1z to a near-neutral -0.2z (39th percentile since 2015), but retail buying has softened, macro hedge funds have largely completed short covering, and foreign investors continue to show limited interest.

• Goldman Sachs: After robust retail investor activity in early 2025, last week saw small net selling by retail, though US equities experienced the largest net buying since December 2021, driven primarily by short covering and modest long buys.

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Top stories from Livewire

Are US assets becoming less desirable? | Globalisation is giving way to modern mercantilism, with state intervention aiming to boost national wealth and self-sufficiency, potentially reshaping global economic spheres and challenging the US dollar's dominance. Despite a 10% dollar drop since Inauguration Day and policy uncertainties, US equity markets, driven by tech giants, face risks from volatility, tariffs, and competitors like China's DeepSeek, prompting diversified, cautious investment strategies.

Don't miss the ASX Investor Days - there's something for everyone | The ASX Investor Day in Brisbane featured a dynamic lineup of experts like Gemma Dale, who likened the volatile economy to an F1 race, and fund managers from Antipodes, Munro, and Plato, who shared insights on navigating market uncertainty and highlighted promising investment opportunities.

Are US Treasuries still the world's safety net? | US Treasuries, long considered the ultimate safe haven, face growing scrutiny due to political dysfunction, soaring deficits, and tariff-driven volatility, with April 2025’s bond market rout pushing yields up as high as 5%. Despite these pressures, Treasuries remain a vital portfolio anchor, offering unmatched liquidity, credit quality, and attractive yields above 4%, especially in intermediate bonds, making them a resilient choice amid market uncertainty.

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What's driving stocks?

[8:40 am] Major US benchmarks finished mostly higher overnight, shrugging off early losses. The S&P 500 marked its sixth straight gain despite falling as much as 1.05% in early trade. This strength may be attributed to:

• S&P and Fitch downgraded the US credit rating in 2011 and 2023 respectively, to AA+. The downgrade by Moody's technically does not change their current credit rating since it was already a split AA+, now its unanimous.

• Goldman Sachs noted US equities saw the largest net buying last week since December 2021, driven by short covering and to a lesser extend, long buys. Short covering may continue to drive near-term gains

• BofA says US credit downgrade won’t drive forced selling of US debut but may worsen Treasury sentiment

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Good morning!

[8:35 am] S&P/ASX 200 futures are up 73 pts (+0.87%), which means the market will recoup the entirety of yesterday's 0.58% fall.

If you’re new to the blog – catch up quick via today’s Morning Wrap.